The Chinese investors we rely on to prop up our debt are balking

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A major Chinese investor is pulling out because of concern about Paulson's flailing responses to the economic crisis, while the Chinese government is lecturing us like we're in debt counseling . . .


Major Chinese Investor Loses Confidence in Paulson’s Bailout Plan

The man who heads up China’s new sovereign wealth fund, Lou Jiwei, startled a lot of people this week with his surprisingly undiplomatic comments about the prospects for his fund pumping more money into cash-starved Western banks. What does it mean?

Lou, speaking in Hong Kong at a conference organized by the Clinton Global Initiative, said managers at China Investment Corp. “don’t have the courage” to invest in Western banks because they don’t know how bad things will get. He also said he had “lost confidence” over the lack of any consistency to measures being taken to fix the banks’ problems. It’s pretty clear he was talking about the ever-changing Paulson-led rescue plan.

When a big investor like the $200 billion CIC chooses to publicly disparage the state of Western banks and the efforts to fix them, it’s bound to attract some attention. Perhaps it was posturing: if Lou complains loudly enough about the lack of protection for his investments in Morgan Stanley or Blackstone – both of which have lost billions on paper — maybe CIC can get those protections on the next big deal they sign.

Then again, Lou may have merely been speaking his mind. If so, he’s articulating what much of the rest of the world already thinks anyway. Does anyone plan to pump billions of dollars into a bank these days that doesn’t own the presses to print the money?

http://blogs.wsj.com/deals/2008/12/04/major-chinese-investor-loses-confidence-in-paulsons-bailout-plan/


China urges Washington to protect its investments

BEIJING (AP) — China's chief trade envoy urged Washington on Thursday to stabilize its economy and protect Beijing's U.S. investments as the two sides opened economic talks overshadowed by the global financial crisis and tensions over currency.

"We hope the U.S. side will take the necessary measures to stabilize the economy and financial markets, as well as to guarantee the safety of China's assets and investments in the United States," Vice Premier Wang Qishan told U.S. Treasury Secretary Henry Paulson and other U.S. officials at the Strategic Economic Dialogue.

Wang did not elaborate. But Beijing is a major owner of U.S. Treasury debt that finances Washington's budget deficit, and the dollar's recent weakness and U.S. financial turmoil have fueled Chinese anxiety about the safety of such holdings.

"The signal China sent on Monday is: We also have our own political problems and issues in a slowing economic environment," JP Morgan's Gong said in a note to clients.

The chairman of China's sovereign wealth fund said Wednesday in Hong Kong that the fund is reluctant to invest more in foreign banks until governments work out coherent policies to cope with global turmoil. The official, Lou Jiwei, said governments around the world seemed to be changing policies every week.

China has said its biggest contribution to world stability will be to keep its own economy growing strongly. Beijing has launched a 4 trillion yuan ($586 billion) stimulus package meant to revive slowing growth through heavy spending on construction and other projects.

China's economic growth is expected to slow this year to about 9 percent, down from last year's 11.9 percent. Communist leaders worry about rising job losses, especially in export industries, and the possibility of unrest.

http://www.google.com/hostednews/ap/article/ALeqM5huuGwQPnieGP_GGUyXKIh1bmnFqwD94RLV9G0

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1. With their investment, you'd think they could have put their feet down long ago.

Why didn't they? I expect they don't want that question asked.

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2. It's coming

if we don't formulate some sort of stimulus plan which is comprehensive and large enough to spur investor confidence in the long term; like China has done in their own economy.